The Importance of Client On-Boarding

RMP Capital’s Gail Winther was recently featured in The Commercial Factor Magazine for her article about the importance of Client On-Boarding.
 
 
Gail M. Winther, Director of Operations, RMP Capital Corp.
Gail M. Winther, Director of Operations, RMP Capital Corp.
ISLANDIA, N.Y. - Oct. 18, 2013 - PRLog -- The most important step in preventing a variety of client issues is the initial on-boarding call.

You should reserve an hour or more for the Client On-boarding call which provides detailed information regarding your program. The steps regarding initial setup, initial funding, and processes going forward. The on-boarding call and information you send to the client is based on the niche they belong too. Whether it’s general factoring, re-discounting, construction, and transportation the procedures and information requested will vary. I have a separate on-boarding checklist for each individual niche.

Prior to the call I email the client attachments of what will be discussed. The email includes; the Client Procedure Manual, Notice of Assignment for them to sign and return, excel spreadsheets for customer information and invoice importing, and schedule of accounts for funding requests. I ask them to print out the Client Procedure Manual and have it available for everyone on the call. I also suggest their accountant or controller is on the call as well then we are able to discuss the accounting process.

I start the call with the Client Procedure Manual – literally reading all pages and pausing to ask if they understand the various topics. The manual includes some of the following:

• Customer (Debtor) Verification and System Setup.

• Initial Funding Procedures.

• Notification and Audit Procedures – to include sample letters.

• Debtor statements are sent out monthly to all debtors. For the Factor I cannot stress enough the importance of debtor statements. This is how we find out about invalid invoices and it decreases the DOS.

• New Debtor Review – the importance of contacting our credit department PRIOR to establishing a relationship with the debtor to ensure they are credit-worthy and a limit is established.

• On-Going Purchases – Emailing us invoices, supporting documents, invoice spreadsheet to import, their aging report, and cut-off time for funding

• Collections Calls – our staff will make the calls.

• Factoring terminology and how to read reports.

• Chargebacks – Short pays

• Reserve Release and the formulas regarding the release.

After reading the manual I discuss at length the Notice of Assignment letter, that is goes to all debtors and only we are allowed to release the notification. As mentioned above our client, who was desperate for additional funds, was able to redirect the debtors payment. We stress to debtors when making our verification calls that this notice is only to be released by us – this is tough because you are trying to develop a positive relationship with the debtor and you do not want to alarm them. Therefore, we continue to verify our payment information on collection calls. Quite frankly, I am not sure how you completely protect yourself from misdirected payments.

I am very fond of spreadsheets and importing data is quick and saves time. I send templates to the client for invoice and debtor contact information. I also walk them through downloading their data to the templates. Initially the first few files will be incorrect – it’s easier to just fix the imports yourself, but if you do that the first time you will end up fixing it every time. The contact information once imported is then verified with Google to ensure the phone numbers and addresses match what we have imported.

During the on-boarding call I use a checklist to ensure all items are covered. By the end of the call they should understand that prior to the first funding; all of their customers will be notified, credit limits established, and all invoices will be verified on the first funding. It is very important to listen and repeat their questions back to them – typically factoring is a new concept for them and the procedures may be overwhelming. I have found out on several occasions that there has been miscommunication on the call – even after reading them the manual.

We also provide re-discount funding this is difficult because you are once removed from the debtor. The Factors client becomes your debtor and the customer your account this can be confusing when importing the data and monitoring the aging. The on-boarding process for this call will be completely different. The information requested differs – the following are in the procedure manual for re-discount clients:

• The factors lockbox is locked by their bank via a contract between the bank, the factor and yourself. Collections are swept into your account on a daily basis.

• Copies of all notification letters, initially and going forward.

• All debtor addresses and contact information for the factored clients as an on-going basis

• Borrowing Base Certificate (BBC), invoice import spreadsheet, invoices along with backup (yes your server will fill up quickly), and current aging.

• Periodic Invoice verification calls will be made by you on the factors behalf.

• Access to the factors database, however, if they divert funds you will be locked out of their database.

To reiterate – Re-discounts clients are difficult because you are once removed from the debtor. If a factor has been in the business a long time they are knowledgeable on how best to divert funds. Once this occurs you obviously stop funding, but it’s a quick race to get your funds back. If you have been acting on their behalf and know the clients debtors it will be easier to stop the diversion. I have learned a lot about this niche and the issues that arise – if anyone would like to discuss please feel free to call me.

Regardless of how successful the on-boarding call goes with your client, without continuous communication with your client and their debtors problems may arise. No matter what is being done in the factoring space – whether it is – rediscounting, participations, or ordinary factoring to small business; it is important to lay out the groundwork for a strong reliable relationship by ensuring that the on-boarding process talks place and that we factors continue to notify and verify everything.


RMP Capital Corp is a nationwide provider of factoring solutions for small to medium sized businesses. RMP also provides factoring services to contractors working on public works projects, small trucking companies and small growing factoring companies in need of rediscount lines of credit. RMP Capital Corp Makes Funding Your Business Easier!

RMP Capital Corp.
1747 Veterans Memorial Highway
Suite 6
Islandia, New York 11749

www.RMPCapital.com
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Tags:Onboarding, Factoring, Factors, Finance, Rediscounts
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